In the media

New DiamondCorp funding shows confidence in South African mine

07 January 2013


Shares in DiamondCorp (DCP) jumped 14% as it announced that it had signed binding legal agreements with Laurelton Diamonds, a wholly-owned subsidiary of Tiffany and Co (TIF), for a term loan of $6 million (£3.7 million) in exchange for an off-take agreement for diamond production from the Lace mine in South Africa.

The terms of the loan were unchanged from those announced on 16 November 2012. The completion allowed the proceeds of the convertible bond issue to be released from escrow and completed the funding required for a 47-level block cave development at Lace.

The loan will be drawn down in two equal tranches on 10 January and 10 April and bear an annual interest rate of 9%. It must be repaid in full by 10 April 2021 and there will be no payments of interest or principal for the first three years of the loan. The loan can be repaid early in part or in full without penalty.

The off-take agreement will take effect from 10 January until the end of the life of the mine. The Lace diamond mine is located 25 kilometres north-west of the Free State Province town of Kroonstad.

Subject to any purchases by the South African state diamond trader, the off-take agreement will give Laurelton Diamonds the right to purchase, on commercial terms related to fair market value, production from the Lace Mine which meets the quality and colour standards required to yield Tiffany-quality polished diamonds. Special stones and those diamonds which do not meet the Tiffany standard will be excluded from the off-take agreement.

Interactive Investor view

Shares in DiamondCorp have soared 64% over the past month as the funding picture for the miner has become much clearer.

With loans from Laurelton and the Industrial Development Corporation announced in May 2012, DiamondCorp now has the cash required to push on with the 1.2 million tonne-a-year block cave development at Lace, illustrating confidence in the mine.

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